Frequently Asked Questions Regarding Annuity Flexibility

Will a life threatening injury to the claimant have an impact on the annuity plan?

Annuity policies can be used in many ways. Can you illustrate some of the uses?

Can a payee of a structured settlement annuity contract demand that the contract be terminated and the commuted value of the contract be paid to him or her as a lump sum?

No. The annuity contract payee is not the owner of the contract and consequently does not have the right to demand commutation from the life insurance company that issued the contract. In fact, even if the policy owner were to agree to commutation it is the accepted procedure that the life insurance company would refuse the request beyond the 10 day "free look" period. Life companies base their denial on the fact that their investment policy is designed to meet the anticipated flow of scheduled payments. Hence any change in that pattern would create an investment gap for the life insurance company. So-called "factoring" companies have called into question the practice of refusing commutation. Factoring companies offer to purchase some or all of the future payments from the payee of a structured settlement. These companies must now conform to the federal law and to the individual stat "Structured Settlement Protection Act." Forty four states have now enacted these "buyout" rules.

Is it better to name a specific person as the beneficiary of the guaranteed benefits of the annuity or the estate of the annuitant?